2018 Strategy Deck vFinal2 - Morgan Stanley

1 Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 18, 20182 NoticeThe information provided herein may include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in this presentation, or in the Company s Annual Report on Form 10-K, Definitive Proxy Statement, Quarterly Reports on Form 10-Q and the Company s Current Reports on Form 8-K, as applicable, including any amendments thereto, which are available on presentation may contain forward-looking statements including the attainment of certain financial and other targets, objectives and goals, as well as future effective tax rates.

2 You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management s current estimates, projections, expectations, assumptions, interpretation or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. The Company does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of forward-looking statements.

3 For a discussion of risks and uncertainties that may affect the future results of the Company, please see the Company s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as applicable, which are available on presentation is not an offer to buy or sell any End Notes are an integral part of this Presentation. See slides 22-28 for information related to the financial metrics in this note this presentation is available at 3 Operating Performance Metrics(1) To provide further transparency and a better understanding of operating performance, our reported results are adjusted below to exclude the aggregate impact of the net discrete tax provision in the fourth quarter of $1,158MM that resulted from the enactment of the Tax Cut and Jobs Act (the Tax Act )

4 And other intermittent net discrete tax benefits, unrelated to the Tax Act, of $168MM and $233MM for the fourth quarter and full year, respectively These Operating Performance Metrics will be utilized throughout the remainder of this presentation to assess our Strategic Objectives established in 2016(2)(3)(2)(4)(2)(5)Quarter Ended December 31, 2017 Twelve Months Ended Dec 31, 2017($MM)As Reported Aggregate Discrete Tax ItemsAdjustedAs Reported Aggregate Discrete Tax ItemsAdjuste dIncome from continuing operations before taxes2,471-2,47110,403-10,403 income tax provision from continuing operations1,767(990)7774,125(925)3,200 Earnings applicable to Morgan Stanley common shareholders5169901,5065,6319256,556 Earnings Per Share ($) tax rate from continuing ( ) ( ) on on Tangible Common of Our Key Strategic ObjectivesAcquire 100% of WM JV and Improve WM Pre-Tax Margin(1)

5 From 17% Post Integration(2)Significantly Reduce RWAs in fixed IncomeLower Expenses and Resize Business FootprintFirm Specific Opportunities:Deeper ISG and WM PartnershipBuild Bank StrategyStrategy Remains Consistent:Invest for growth and maintain fiscal vigilance and capital sufficiency2013: Restructuring2016: ProfitabilityContinued ExecutionWealth Management Pre-Tax Margin(1): 23-25%Complete fixed income Restructuring While Maintaining Revenue FootprintIncrease Capital Return to ShareholdersStreamline: $1Bn Expense Reduction; <74% Efficiency Ratio(3)9-11% ROE in 2017(4)123455 Mark to Market: 2016-2017 Strategic Objectives(1)1 Streamline: $1Bn Expense Reduction, <74% Efficiency Ratio 2 Complete fixed income Restructuring and Maintain Revenue Footprint 3 Wealth Mgmt.

6 Pre-Tax Margin(4): 23 25% 4 Increase Capital Return to Shareholders 5 ROE(6): 9 11%2017 ResultsObjective73% Firm Efficiency Ratio(2)Full Year Revenues $ with Fewer Resources (vs. $ ex. DVA in 2014 & 2015(3))Received Non-Objection to Further Increase Dividend (+25%) and Buyback (+43%)(5) Margin in **% ROE(6)62017 Results in PerspectiveResults(3)Mixed Operating EnvironmentRevenues: $ YoY GrowthExpenses: $ Efficiency Ratio(4)7% YoY GrowthS&P 500: +19% Strong Equity Market PerformanceAverage VIX: 11 Depressed Equity Market VolatilityFederal Funds:+75bpsContinuation of Monetary Policy Tightening.

7 Europe Moving off Negative Rates10 Year UST Volatility at Cycle Lows(1)Interest Rates Remained Range BoundUS GDP(2): + CPI(2): + Modest Domestic Growth and Muted InflationGlobal GDP(2): + Growth StrengtheningNet income to Common: $ **Bn21% YoY GrowthAvg. Common Equity: $70** **% ROE(5)31**% Tax of Our Strategic Plan Increased Profitability(1)Net income to Common ($Bn) on Equity(4)(%)**Return on Tangible Common Equity(5)(%)Book Value Per Share($) Book Value Per Share(6)($) Per Diluted Share ($)+49%+9%+11%Improving in Improving Per Share (3)(2)**+39%**(2)(2)(2)(3)(3)(3)840%5%55 %Execution of Our Strategic Plan Increased Stability $ **Bn2012201727%9%63%$ Net income to CommonBy Segment, ex.

8 DVA and Discrete Tax Items ($Bn)(1)(2)(3)(4) Return on EquityBy Segment, ex. DVA and Discrete Tax Items (%)(1)(2)(3)(4)Wealth ManagementInvestment ManagementInstitutional SecuritiesWealth ManagementInvestment ManagementInstitutional Securities17% CAGR9 Lending StrategyContinue to Focus on Execution OpportunitiesWealth Management Margin ExpansionMaintain Deep Institutional Securities Group FootprintRealize Potential of Investment Management PlatformDrive Operating Leverage Through Expense DisciplineMaintain Capital Return Profile23465110 Lending Strategy Produces Organic Revenue Growth1 Attractive Loan Growth

9 ManagementInstitutional Bank(1)Loans ($Bn)..Supported by Strong Deposit Bank(1)Deposits ($Bn)Third Party Deposits(2)Savings & Other DepositsSweep DepositsTime Deposits$159Bn2017 Deposit Funding MixISG Secured & OtherTailoredSecurities-BasedMortgages$1 04Bn2017 Lending MixCommercial Real EstateCorporate LendingWealth Management Sourced Deposits Wealth ManagementInstitutional to Fee Based AssetsFee Based Assets ($Tn)Increasing Lending PenetrationTotal Client Liabilities ($Bn) Expense BaseNon-Compensation Expense ($Bn)

10 Compensation Leverage Compensation Ratio(1)(%)58%56%20132017% of Total Client Assets37%44%Wealth Management Scale Benefits & Secular Trends, Driving Bank LendingBroker-Dealer / Margin Lending1230%13%54%3%Wealth Management Benefits from High Quality Revenue Profile2 Net Revenues ($Bn)Transactional(1)Net Interest IncomeAsset Management2013 $ $ Dependence on More Volatile RevenuesStability and Growth Daily Revenue Distribution(2)2016201720150%0%<$50MM0%5 2%12%$50MM - $60MM57%46%61%$60MM - $70MM40%1%26%$70MM - $80MM2%0%1%$80MM+0%13 Wealth Margin Expansion, While Investing in Growth29%10%14%18%20%22%22% - '19 Pre-Tax Margin(1)(2)(3)(%)Margin Drivers.